GAO: CMS failed to stem tide of improper payments

May 3, 2004 WASHINGTON - Although CMS identified improper payments for power wheelchairs in early 1997, the Medicare program did not lead “a full-scale, coordinated effort” to address those improprieties until Sept. 2003 when the Wheeler Dealer scandal erupted in Houston, according to testimony by the GAO's director of healthcare, Leslie Aronovitz. The GAO blamed inadequate claims information, scarce resources at CMS and flaws in the supplier screening process for the vulnerability that resulted in millions of dollars in improper payments. The accounting watchdog reached its findings after a two month's study of 1997-2002 claims data from the SADMERC, written policies and procedures by CMS and the DMERCs, coverage guidelines and budget and expense data for contractor activities. The GAO also interviewed CMS and DMERC officials, as well as suppliers, manufacturers and other industry representatives. In 1997, the SADMERC (Statistical Analysis Durable Medical Equipment Regional Carrier) alerted CMS to a tripling in payments for power wheelchairs between Oct. 1995, when total expenditures amounted to $8 million, and March 1997 when payments had climbed to $24 million. In 2003, Medicare paid about $1.2 billion for power wheelchairs. After 1997, the SADMERC continued to highlight the rapid rates of increase and even went so far as to identify which states and suppliers were responsible for the escalating payments. But CMS did little in response, claiming it was the DMERC's responsibility to respond to issues related to rising utilization, said the GAO.